Proximity to amenities, transport links, jobs and social activities are top of the agenda for a growing number of people who are rejecting homeownership in order to live in city centres.
Buy-to-let landlords and property investors who select the best rental homes in city and town centres are seeing the strongest level of interest from long-term renters compared with more rural locations, as more people are brought back to the office post-pandemic.
Affordability is one key issue that is keeping people renting for longer and costing them out of the homeownership race, while renting also allows people to live in a preferential location compared to where they might be able to afford to buy.
This is exacerbated by high property prices versus wages, particularly in parts of the south of England and London. Living in a desirable area close to good amenities is difficult for most prospective homeowners, but more possible for tenants in the private rented sector.
New research published by MRI Software looking at tenant preferences and trends has revealed a growing preference among tenants – but younger ones in particular – to live close to daily amenities, office locations, career opportunities and social activities, which are more likely to be found in city centres.
MRI Software’s 2024 Rental Housing Trends Report revealed that four fifths of tenants currently feel priced out of homeownership, and a third have abandoned the idea of getting on the property ladder, boosting numbers in ‘generation rent’.
Landlords should look at what renters want
Location and affordability are top concerns among today’s tenants, and this is something for property investors and landlords to keep high on their agendas when deciding on where to invest and what property type.
Particularly as growing numbers of businesses are bringing staff back to the office, living within or very close to a city or town has once again become crucial for today’s workers, having fallen down the priority list slightly due to the rise of home-working due to the pandemic.
City and town centres are the areas that are likely to see the greatest amount of investment in new property developments that are either specifically for tenants (build to rent) or can contain a mix of homeowners and buy-to-let properties.
These newly built developments are particularly appealing to buyers and landlords due to the fact that sustainability is now higher on the agenda than ever for renters, which was another finding from the report.
The number of long-term renters has risen across all age groups, according to MRI Software’s report, meaning landlords may find a much wider demographic of tenant types to choose from. This includes the over-55 age group, who have also seen a particular shift towards long-term renting.
Smaller city centres and towns outperforming
While London has the highest proportion of renters to homeowners than any other UK city, the large regional cities such as Birmingham, Manchester and Leeds are also extremely popular among tenants seeking to live close to the growing number of job opportunities and amenities on offer in these places.
However, in the latest rental report from Zoopla, it was revealed that smaller city centre and town locations were actually seeing faster rent rises due to an increase in tenant demand.
This is partly down to the fact that the country’s major regional cities have seen the fastest rental growth of anywhere in the UK, led by Manchester. Close to Manchester, for example, Stockport has surged as a property investment destination thanks to recent regeneration and better affordability making it a favourite among tenants.
Commenting on MRI Software’s findings, Dan Foryszewski, Director for Residential Investor Solutions at MRI Software, said: “The latest research from MRI Software reveals a significant shift in renter behaviour, with affordability and financial pressures pushing the aspiration for home ownership further out of reach for many.
“Today, 80% of renters feel priced out and a growing number choosing to rent long-term which is why the need for affordable housing solutions has never been more important.”
If you’re seeking your next city or town property investment opportunity, get in touch with BuyAssociation today or browse some of our current projects here.
